The FLSA
requires that most employees in the United States be paid at least the federal minimum wage for all hour worked and overtime pay at time and one-half the
regular rate of pay for all hours worked over 40 in a workweek. However,
Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as
bona fide executive,administrative,professionaland outside salesemployees. Section
13(a)(1) and Section 13(a)(17) also exempts certain computer employees. To qualify
for exemption, employees must meet certain tests regarding their job duties and
be paid on a salary basis at not less than $455 per week.

Equally Protective Duties Tests; Exemption Not Based on
Job Titles

The standard duties tests of the final regulations are
effective August 23, 2004, and are as protective as, if not more protective
than, the short duties test of the old regulations. Prior to the issuance
of these final regulations, the last major revision of the duties tests
occurred in 1949. The duties tests of the old regulations were
complicated and contained difficult provisions to apply. These old
regulations were based upon a work place that has experienced dramatic
transformations and were not relevant to the work environment of the 21st
century. The final regulations use objective, plain language so that
employees can understand their rights to overtime pay and employers can know
their responsibilities for overtime pay.

Recently, the United States District Court for the District of Columbia confirmed that the standard duties tests for the administrative
exemption of the final regulations are substantially the same as those in the
old regulation. In a case brought against Government Employees Insurance
Company (GEICO) under the old regulation, insurance claims adjusters were
seeking overtime
pay. GEICO claimed it was not liable for any
overtime pay because these adjusters were exempt administrative employees.
The court looked to the final regulations that are effective August 23,
2004 for guidance in concluding that GEICO improperly classified the employees
as administratively exempt. Even though the final regulations were not in
effect when the court announced its decision, it found that “they are
instructive with respect to the Department of Labor’s interpretation of the
requirements of the administrative exemption.” The court also observed
that “[t]he general criteria for employees employed in a bona fide
administrative capacity are essentially the same under the August 2004
regulations as in the current regulations.” Thus, this decision confirms
that the standard administrative duties tests of the final regulations are
equally protective as the old regulations.

The decision also is instructive because it confirms that
the exemption does not apply based upon job title alone, but rather that a
case-by-case assessment of an employee’s job duties is required. Thus,
there is no blanket exemption for claims adjusters, and when such an
individualized inquiry is made, some claims adjusters will fail to satisfy the
tests for exemption.